Mind-blowing solar plus storage contracts

We all know that wind and solar are now cheaper than coal, and even in the USA, where gas is cheap, sometimes than gas too.  But the fossil-fuel spruikers will leap into words and point out that the sun doesn't shine at night and the wind doesn't blow all the time.  (We didn't know that.)  So the holy grail is wind or solar with enough storage to "firm" it, i.e., to provide the equivalent output to baseload power stations.  In Hawaii, a classic example of "island grids", the latest solar plus storage contracts now provide that, and significantly more cheaply than oil-fired power stations.  That is indeed mind-blowing.

From GreenTech Media:

This week Hawaiian Electric Company sent seven new solar-plus-storage contracts to state regulators. Six come in at record-low prices for the state, under 10 cents per kilowatt-hour.

The projects, which now await regulatory approval, would add 262 megawatts of solar and 1,048 megawatt-hours of storage distributed over three islands. The company said the projects will provide power “in place of volatile prices of fossil fuels,” which it quotes at about 15 cents per kilowatt-hour. 

Both the pricing and the size of the contracts are significant. 

“It’s hard to overstate the scale of this announcement,” said Dan Finn-Foley, a senior energy storage analyst at Wood Mackenzie Power & Renewables. 

Past solar-plus-storage prices in Hawaii came in at 13.9 cents per kilowatt-hour in 2016 and 11 cents per kilowatt-hour in 2017. One of the projects announced this week by Hawaiian Electric is more expensive than the latter price — 15 megawatts of solar and 60 megawatt-hours of storage at 12 cents per kilowatt-hour. But another 90 megawatts of solar and 360 megawatt-hours of storage came in at what Finn-Foley called a “jaw-dropping” 8 cents per kilowatt-hour. That means that from 2016 to 2019 solar-plus-storage PPA prices in the state dropped by 42 percent. 

Will Giese, executive director at Hawaii’s Solar Energy Association, called the pricing “mind-blowing.” 

“With prices like these, it’s easy to understand the confidence of Hawaiian electric providers that their islands can hit 100 percent renewables ahead of the 2045 mandate,” said Finn-Foley. 

[Read more here]

Some notes:

1. These contracts are for solar plus 20 hours of storage, assuming a solar capacity factor of 20%, 16 hours at a capacity factor of 25%.  This is enough to provide baseload power.  Remember, apart from places like Las Vegas, the highest electricity demand is during the day--some 60%.  This suits solar power almost perfectly, with the only problem being that demand peaks after the sun does, requiring some 4 hours of storage to fill that gap.  The rest of the storage satisfies night demand.
2. The total cost is something like 9 cents/kWh or $90/MWh--for "firm" electricity.  This compares with oil at $150/MWh, coal at an average of $102/MWh and gas at $58/MWh (in the US--it's twice as expensive elsewhere)
3. The costs have fallen 42% in 3 years.  They will go on falling.  The gap between "firm" solar or wind and fossil fuels will only get bigger.
4. Such cost comparisons don't only apply to Hawaii, but to any off-grid community, such as mines, remote towns, other islands, etc.  In fact another 30% cost decline over the next couple of years (which is very likely) will mean that even non-islanded grids will find these costs very attractive.  Only fully-depreciated and paid-off coal power stations will still be competitive.  And they're wearing out because they're aging and will have to be progressively shut down over the next 20 years.  The future is renewables.
5. The utilities really like the fixed costs of solar (and wind) compared with variable costs of fossil fuels.  Regulators won't let them adjust their selling prices fast enough to compensate for swings in oil, coal and gas prices.  But with solar and wind, because they have no fuel inputs, the costs are fixed and known in advance.  Perfect.